A study by market research firm Dalbar and reported by the New York Times found that in two decades ending last December, the average stock fund investor realized 3.8 percent in annualized returns. That's compared with more than nine percent for the Standard & Poor's 500 (S&P 500) stock index.

In the TSP, the C Fund is designed to match S&P 500 performance.

"The fundamental problem, as noted in the story, with frequent trading is that very few people can consistently outsmart the market both in when to get out and when to get back in," Tom Trabuco, federal Retirement Thrift Investment Board external affairs director, told Federal News Radio. "The other [problem] is, of course, that there are costs associated with frequent trading, which take away from your investment return."

Another study found that some wealthy investors feel guilty for trading too often, the Times reported. Forty percent of study participants said they practice market timing instead of a buy and hold strategy.

The good news, Trabucco said, is that "60 percent of the wealthy [surveyed] are saying you're better off ... being more conservative."